Here's a list of the top tax mistakes made by Money Central readers (from a poll they took):
- They let the government keep their money for way too long.
- They wait too long to get started on their taxes.
- Because they wait too long, they probably pay too much to the Internal Revenue Service.
- And a few do some really stupid things that could possibly land them in jail.
Yep, these are pretty common unfortunately. If you want to check out some more, look at my post on Five Common Tax Filing Mistakes. You might also want to check out my posts and the comments on giving the government an interest-free loan.
Next, I pulled out some stats from the piece that I found interesting:
Almost 20% of the 1,584 readers who responded to this February's survey said they don’t even start to think about taxes until April 1 -- and 6.9% say they “often need an extension.”
More than 62% of those who responded to our survey said that they expect to get a tax refund for their 2005 taxes. More than half of them expect a check for more than $1,000.
Here are some figures directly from the IRS instructions for 2005 returns. If you itemize your deductions and have no business income, but did sell some stock, the IRS expects you to spend 27.5 hours doing your 1040 return. If you used tax software, it increases to 37.8 hours!
More than 10% of this year's respondents admitted fudging on their taxes. That's up from 8.5% a year ago. Of this group, 27% told us that they fabricated deductions, and 3.4% professed to actually making up fictional children or other dependents. Since Social Security numbers are required for claiming dependents, I wonder how they did that? Or are they pulling our leg?
My thoughts:
1. I knew people put off their taxes -- but almost 20% wait until April 1 to start thinking about their taxes? I guess these are the people you see on news reports at the post office at 11:58 pm on April 15.
2. I think I read somewhere that the average tax return is in the $2,000 range. Lots of money to be letting the government use for free.
3. The complexity of the tax code and time it takes to do my taxes are two of the reasons I use a CPA to do my taxes. It's worth it to save 30-40 hours of my time.
4. There is NEVER a good reason to "fudge" on your taxes. It's just not worth it. Yes, the chances of getting caught may be slim, but if you are caught, the penalties are huge. Besides, what savings is worth your integrity?
For more on taxes, see these posts:
What are people doing that it takes almost 40 hours to complete their taxes with tax software? Even if I manually entered everything I would spend 5-6 hours at most. I use Turbo Tax and import all personal information from the previous years tax return. I am also able to import most W-2's. I have dependent care, charitable contributions, and Mortgage interest/tax deductions. Brokerage statement for interest, dividends, capital gains income. I spent a total of 2.5 hours from midnight till 2:30am (half asleep). Federal and State done, filed electronically and awaiting my direct deposit refund within 2 weeks.
Posted by: Ken | March 04, 2007 at 08:28 PM